2007 (12) TMI 83 - AT - Central Excise

Valuation of goods which were stock Transferred from the factory to the depots & later sold to industrial consumers - time of removal in respect of goods removed from the place of removal shall be deemed to be the time at which such goods are cleared from factory - once the goods are cleared from factory to depot on payment of duty on the basis of price prevailing at depot, at the time of removal from the factory there is no need to chase the goods & see at what price the same are actually sold

Summary

Issues:
Correct valuation of coated abrasives for duty calculation based on discounts given to industrial consumers and dealers.

Analysis:
The case involved appeals by the Revenue against Orders-in-Appeal passed by the Commissioner of Central Excise regarding the valuation of coated abrasives stock transferred from the factory to depots and later sold to industrial consumers. The dispute centered around the discounts given to industrial consumers and dealers on these goods. The Revenue contended that the duty should be based on the value prevailing at the time of removal from the factory to the depot, whereas the respondents argued that duty payment at the time of removal from the factory was sufficient, regardless of eventual sales prices.

The Commissioner (Appeals) held that duty payment based on the value at the time of removal from the factory to the depot was adequate, and there was no need to track the subsequent sales prices. The Commissioner emphasized that the percentage of sales to industrial consumers from the depot was minimal, and the discount discrepancies did not warrant additional duty demands. The Revenue challenged this decision on several grounds, including the incorrect valuation of goods at the time of removal and the applicability of changes in Section 4 of the Act.

The Appellate Tribunal, after careful consideration, upheld the Commissioner's decision. They reiterated that duty liability should be discharged based on the value at the time of removal from the factory to the depot, as per Section 4(b) and Valuation Rules. The Tribunal agreed with the Commissioner that once duty was paid at the depot value, there was no need to reassess based on actual sales prices. The Tribunal dismissed the Revenue's appeals and upheld the Orders-in-Appeal, concluding that the duty demands were unwarranted given the circumstances of the case.

In summary, the judgment clarified the valuation method for duty calculation on coated abrasives transferred from the factory to depots and sold to industrial consumers. It emphasized the importance of paying duty based on the value at the time of removal from the factory to the depot, rather than tracking subsequent sales prices. The decision favored the respondents, highlighting the minimal impact of discount variations on duty liability and dismissing the Revenue's appeals.